Airlines within airlines: An analysis of US network airline responses to Low Cost Carriers.

Citation:

Peter Morrell, Airlines within airlines: An analysis of US network airline responses to Low Cost Carriers, Journal of Air Transport Management, Volume 11, Issue 5, Ninth Conference of the Air Transport Research Society, September 2005, Pages 303-312.

Abstract:

The establishment of Low Cost Carrier offshoots by network carriers has three possible objectives: to spin off profitable businesses; to see off low cost competition in key markets; and to establish a test-bed for adapting low cost business processes to their mainline operations. It is argued that US network carrier offshoots have failed on all three counts. The significant cost differences between network and Low Cost Carriers are identified, and it is shown that network carriers have made little inroads into closing this gap, whether or not they set up Low Cost Carrier offshoots. Some reasons for the failure of the offshoots are proposed by examining operating differences: mixed fleets, keeping interlining and two class cabins and the lack of progress on reducing labour costs. Labour Union restrictions and the lack of separation from the main airline were crucial.

Aer Lingus has been an unique airline as it transitioned from a full-service airline to a low-cost carrier and is currently positioned as a value hybrid airline. It has coexisted with Ryanair for decades and it encountered ...

Direct competition between full service airlines and no-frills carriers is intensifying across the world. US and European full service airlines have lost a significant proportion of their passengers to low cost carriers, ...

Meaningful definitions of and distinctions between airline business models are not easily formulated, particularly when one considers the extremely dynamic nature of the industry. The paper outlines a product and organizational ...